FUNDAMENTAL NEWS AND TECHNICAL ANALYSIS REPORT – 20 FEBRUARY 2023
20 Feb 2023
China keeps its loan prime rate the same for a sixth month running
Asian stock market closes in red on Friday. The Shanghai Composite is in red by 0.77% at 3224.02. Overall, the Singapore MSCI is up 0.46% at 303.35. Over in Hong Kong, the Hang Seng Index is down 1.28% at 20719.81. In Japan, the Nikkei 225 is down 0.66 at 27513.13. While the Topix index is down 0.46% at 1991.93, South Korea’s Kospi is down 0.98% at 2451.21. Australia S&P/ASX 200 is down 0.86% at 7346.80.
Top News of the Day: –
China kept its key loan prime rate unchanged at historical lows on Monday, as the country struggles to maintain a balance between supporting a fledgling economic recovery and keeping its yuan currency robust.
The People’s Bank of China (PBOC) held its one-year loan prime rate (LPR) at 3.65%, while the five-year LPR, which is used to determine mortgage rates, was maintained at 4.30%. Both lending rates were at their lowest in the past two decades.
February now marks the sixth straight month that China has maintained its key lending rates at historically low levels, after an unexpected cut in August 2022.
The LPR is decided by the PBOC based on considerations taken from 18 designated commercial banks and is in turn used as a benchmark by private banks in offering loans.
Monday’s move was largely in line with a Reuters poll. But it did disappoint a minority of analysts that forecast more interest rate cuts, given that Chinese economic growth slowed drastically in 2022, and has so far shown little improvement despite the lifting of anti-COVID measures earlier this year.
The lifting of anti-COVID measures triggered an immense spike in infections, which disrupted local business activity. Still, Chinese government officials recently declared a “decisive victory” over COVID, citing a relatively small fatality rate in the latest outbreak.
Market Summary as of 17/02/2023:
European equities Friday closing. The DAX futures contract in Germany traded down 0.33% at 15428.00, and CAC 40 futures down 0.25% at 7347.72. UK 100 futures contract in the U.K. is down 0.10 at 7347.72.
In the U.S. on Wall Street, the Dow Jones Industrial Average closed up 0.39% at 33826.69. The S&P 500 was down 0.28% at 4079.09 and the Nasdaq 100 was down 0.58% at 11787.27, NYSE 0.21% closes at 15840.16.
Top Market News Today:
In the Forex market, GBPUSD up 0.14% at 1.2055. The USDJPY is down 0.09% at 134.02, and The USDCHF is down 0.17 at 0.9225. EURUSD up 0.04% at 1.0698. EUR/GBP is up 0.03% at 0.8880. The USD/CNY is down 0.15% at 6.8555 at the time of writing.
In the Commodity market U.S. Gold futures up at 0.22% $1,845.57. Elsewhere, Silver futures up 0.77% at $21.86 per ounce, Platinum up 0.87% at $927.95 per ounce, and Palladium up 0.58% at $1504.26.
Brent Crude Oil is up 0.94% at $83.79 per barrel.
In the Cryptocurrency Markets, Bitcoin was at 24520.70 up by 1.00%, Ethereum was up 0.95% at 1696.22, and Litecoin at 98.09 up 0.63%, at the time of writing.
Top Market Segment to Watch Out for Today:
OIL- Oil prices rose on Monday, recouping a measure of recent losses, although pressure from concerns over rising interest rates and deteriorating demand persisted ahead of more indicators from the Federal Reserve on the path of monetary policy.
Crude prices were nursing steep losses from the prior week, as hotter-than-expected U.S. inflation and hawkish comments from some Fed officials ramped up fears of more policy tightening.
Rising interest rates are expected to stymie economic activity this year, which in turn could fuel a slowdown in oil demand.
US: – U.S. Trade Representative Katherine Tai on Friday met with European Union Executive Vice President Valdis Dombrovskis and discussed the U.S. Inflation Reduction Act, Tai’s office said in a statement.
EU countries fear the U.S. legislation’s $369 billion of subsidies for electric vehicles and other clean technologies could put companies based in Europe at a disadvantage.
The subsidies, largely for manufacturers based in North America have local content requirements that EU leaders fear may lure companies away from Europe. The legislation excludes electric vehicles assembled outside of North America from tax credits in the United States.
“Ambassador Tai expressed her optimism that the United States and European Union could continue working closely together on their shared goal of strengthening the clean energy sector globally,” Tai’s office said after the meeting on the margins of the Munich Security Conference.
The EU wants the same treatment as U.S. trade partners Canada and Mexico, whose production is largely included in the subsidy schemes but any revision of the act by the U.S. Congress is out of the question.
European nations are not the only ones who have raised concerns with the Inflation Reduction Act. South Korea has also sought talks with the United States over it.
The European Commission and the White House have set up a high-level task force to discuss the issue.
Tai and Dombrovskis also discussed the ongoing negotiations for a global arrangement on sustainable steel and aluminum and agreed to remain in close contact as negotiations continue in 2023, the USTR office added.
UK: – Average asking prices for British residential property rose by just 14 pounds ($17) in February from January, the smallest rise on record for a month which normally sees a big seasonal increase, data from property website Right move showed on Monday.
Right move said the minimal increase – effectively zero in percentage terms – suggested that property sellers were heeding advice to price their homes realistically to sell them into a market that has slowed sharply in recent months.
“This month’s flat average asking price indicates that many sellers are breaking with tradition and showing unseasonal initial pricing restraint,” he said.
The monthly change – which is not seasonally adjusted – was the smallest January to February move since Right move’s records started in 2001. Compared with a year earlier, asking prices were still 3.9% higher.
At the start of February, mortgage lender Nationwide Building Society (LON: NBS) reported the longest run of monthly falls in selling prices since the global financial crisis.
Economists polled by Reuters in November forecast prices would fall by 5% this year, while analysts at Japanese bank Nomura predicted last month that there would be a 15% decline by mid-2024.
Right move said there had been some recovery in demand since late 2022 when mortgage rates soared following former prime minister Liz Truss’s “mini-budget”.
Buyer demand was up by 11% in the first two weeks of February compared with the same period in 2019.
The number of sales agreed was down 11% on pre-pandemic levels, compared with a 30% crash just after the mini-budget.
British house prices had risen by more than a quarter since the start of the COVID-19 pandemic, mirroring a trend in other rich economies that reflected ultra-low interest rates and a greater desire for living space during lockdowns.
Top Economic Releases Today:
- CNY: PBoC Loan Prime Rate Actual 3.65%, Forecast 3.65%, Previous 3.65% at 06:45
- SEK: CPI (YoY) (Jan) Actual 11.7%, Forecast 11.8%, Previous 12.3% at 12:30
- SEK: CPI (MoM) (Jan) Actual –1.1%, Forecast –1.1%, Previous 2.1% at 12:30
- GBP: German Buba Balz Speaks at 22:30
- EUR: Consumer Confidence (Feb) 20:30
GBPUSD TECHNICAL ANALYSIS
TRADE SUGGESTION – SELL AT 1.20418, TAKE PROFIT AT 1.20127, SL AT 1.20512
EURUSD TECHNICAL ANALYSIS
TRADE SUGGESTION – SELL AT 1.06957, TAKE PROFIT AT 1.06724, SL AT 1.07010
AUDUSD TECHNICAL ANALYSIS
TRADE SUGGESTION– SELL AT 0.68969, TAKE PROFIT AT 0.68875, SL AT 0.69024
USDJPY TECHNICAL ANALYSIS
TRADE SUGGESTION- BUY AT 134.119, TAKE PROFIT AT 134.284, SL AT 134.088
NASDAQ 100 INDEX TECHNICAL ANALYSIS
TRADE SUGGESTION – BUY AT 12366.32, TAKE PROFIT AT 12387.84, SL 12351.74
BRENT CRUDE OIL TECHNICAL ANALYSIS
TRADE SUGGESTION– SELL AT 83.52, TAKE PROFIT AT 82.20, SL 83.69
GOLD TECHNICAL ANALYSIS
TRADE SUGGESTION– BUY AT 1842.50, TAKE PROFIT AT 1849.80, SL 1839.79
BITCOIN TECHNICAL ANALYSIS
TRADE SUGGESTION- BUY AT 24545.95, TAKE PROFIT AT 25077.19, SL AT 24309.84